NEW YORK — A party seeking to vacate an arbitration award on the basis of a party-appointed arbitrator’s undisclosed relationship must prove that the relationship or the non-disclosure itself “influenced the arbitral proceedings or infected an otherwise-valid award,” a federal appellate court has ruled.

In a June 7 opinion, the 2nd Circuit U.S. Court of Appeals overturned a ruling in which the U.S. District Court for the Southern District of New York vacated an arbitration award on the basis of a party arbitrator’s failure to disclose a financial relationship with one of the parties. The appellate court remanded the case, ...